We’ve seen in the last few years businesses that haven’t had a working budget and the issues they’ve faced without financial control and direction so I want to share with you some of these stories. Without a business budget you are essentially running blind. The risk here is that you start losing money and don’t realise until it’s too late. One of the other dangers is coming into a nasty surprise like an unexpected or unplanned tax bill which in some cases I see puts people out of business.
I’ve lost count of the number of times I’ve seen a business that doesn’t have a budget who finds that even if they’re selling as much product as they expected, and attracted as many customers as is realistic, the numbers just didn’t add up. They never saw where their profits were being eroded and ended up losing a stack of money. Setting targets in your head can be dangerous, as it may simply be impossible to make any profit from the mental targets set.
Having a written budget means you know from the outset what your anticipated monthly expenses will be. From here you can plan your revenue and identify what is your ‘breakeven point’ – that is how much do you need to sell as a minimum to at least breakeven and cover your costs. Many business owners will be amazed by how much their expenses are eating into the income and by simply opening the doors they are losing more money.
No business, no matter how small or large should be without a working budget, it’s just too risky to run blind.